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Saperstein is a fan of Apple’s ecosystem.
Dan Kitwood/Getty Images
Tech stocks like
Apple
and
Microsoft
took a beating this week as key inflation data came in hotter than expected. Despite the sell-off, a top financial adviser remains positive on large-cap tech stocks.
The August inflation report was a shock to the market. The consumer price index rose more than expected, leaving investors more concerned than before about the aggressiveness of the Federal Reserve in its fight to calm still too high prices. This was reflected in the yield on the 2-year Treasury note, which climbed to 3.8% on Wednesday from 3.57% last Friday.
Higher rates are rarely good for the stock market, and Tuesday was no exception as all three major indices suffered their worst losses since June 2020.
Dow Jones Industrial Average
fell 3.9% and the
S&P500
was down 4.3%, but the real damage was in heavy tech
Nasdaq Compound,
which fell 5.2% as shares of Apple (ticker: AAPL) and Google parent Alphabet (GOOGL) fell around 6%, while Microsoft (MSFT) fell 5.5%. Shares of Meta Platforms (META) fell 9.4% for the company’s worst day since Feb. 3.
This makes sense given that growth stocks are particularly sensitive to higher rates. Growing companies, such as those in big tech, generate much of their cash flow in the future, and higher interest rates mean that future cash is worth less than it was when rates were lower.
But Richard Saperstein, chief investment officer for Treasury Partners and a financial adviser ranked No. 7 in 2022 according to Barronssays it remains overweight some of the world’s biggest tech stocks.
“We want to have companies that are non-cyclical, have high free cash flow, structural tailwinds, strong balance sheets, and can sustain a slowing economy,” Saperstein said.
Specifically, Saperstein said he was overweight Apple, Microsoft, and
Alphabet
,
and sees the days when stocks have fallen as much as they were on Tuesday as “an opportunity” for investors who are underweight stocks to add them to their portfolios.
Saperstein calls Microsoft “one of the most critical and indispensable IT vendors.” He also likes that Microsoft has “low levels of regulatory risk,” especially compared to companies like Google and Meta, which “use your data to drive advertising sales.”
Saperstein is a fan of Apple’s “ecosystem” and thinks new products like the iPhone 14 and Apple Watch Series 8 could be potential catalysts for the stock, as well as the continued improvement of its products.
“They add value to new products, they don’t just regurgitate the same product with a bigger screen, but they add value along the way,” Saperstein said. “We’re seeing an increase in sales, an integrated base of phones that are going to be resold to people who have older phones, service revenue is approaching 23% of sales… there’s a huge amount of buybacks and a very solid.”
Even when it’s in disgrace.
Write to Angela Palumbo at angela.palumbo@dowjones.com
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